SW Acquisition Co., Inc. v. Akzo Nobel Paints, L.L.C.

2022 Ohio 3674, 200 N.E.3d 326
CourtOhio Court of Appeals
DecidedOctober 13, 2022
Docket111327
StatusPublished
Cited by1 cases

This text of 2022 Ohio 3674 (SW Acquisition Co., Inc. v. Akzo Nobel Paints, L.L.C.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SW Acquisition Co., Inc. v. Akzo Nobel Paints, L.L.C., 2022 Ohio 3674, 200 N.E.3d 326 (Ohio Ct. App. 2022).

Opinion

[Cite as SW Acquisition Co., Inc., v. Akzo Nobel Paints, L.L.C., 2022-Ohio-3674.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

SW ACQUISITION CO., INC., :

Plaintiff-Appellee, : No. 111327 v. :

AKZO NOBEL PAINTS, LLC, ET AL., :

Defendants, :

[Appeal by PPG Architectural : Finishes, Inc.,

Defendant-Appellant.] :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: October 13, 2022

Civil Appeal from the Cuyahoga County Common Pleas Court Case No. CV-18-904917

Appearances:

Strauss Troy Co., LPA and Philomena S. Ashdown, for appellee.

Thompson Hine LLP, Timothy J. Coughlin, Mark R. Butscha, Jr., and Brenna L. Fasko, for appellant. EILEEN A. GALLAGHER, P.J.:

Defendant-appellant PPG Architectural Finishes, Inc. (“PPG”)

appeals from an order of the Cuyahoga County Court of Common Pleas denying its

motion to disqualify counsel for plaintiff-appellee SW Acquisition Co., Inc.

(“SWAC”) under Prof.Cond.R. 3.7. PPG contends that the common pleas court

abused its discretion in refusing to disqualify SWAC’s counsel, attorney Philomena

Ashdown and her law firm, Strauss Troy Co., LPA (“Strauss Troy”), from

representing SWAC in proceedings before the common pleas court and in a related,

yet-to-be-filed arbitration proceeding because (1) attorney Ashdown and Strauss

would likely be “necessary witnesses” in the arbitration and (2) attorney Ashdown

and Strauss Troy’s representation of SWAC in the arbitration would likely “require

them to defend (or abandon) their prior work,” creating an “inherent conflict of

interest” under Prof.Cond.R. 1.7 and 1.9.

For the reasons that follow, we affirm the common pleas court.

Procedural and Factual Background

In September 2009, Miller Brothers Wallpaper Company, Inc.

(“Miller Bros.”) and Akzo Nobel Paints, LLC (“Akzo Nobel”), the predecessor-in-

interest to PPG, entered into (1) an asset purchase agreement (the “APA”), pursuant

to which Miller Bros. purchased certain retail paint stores and other assets from

Akzo Nobel, and (2) an authorized dealer agreement (the “ADA”), pursuant to which

Miller Bros. became a “semi-exclusive dealer” of certain Akzo Nobel paint products.

Strauss Troy represented Miller Bros. in the negotiation, execution and closing of the ADA and the APA. Attorney Ashdown was not involved in the representation of

Miller Bros. in connection with the ADA or APA.

The ADA contained a broadly worded arbitration provision, which

states, in relevant part:

Any controversy or claim arising out of or relating to this Agreement or breach of this Agreement shall finally be settled by binding arbitration before a single arbitrator (the “Arbitration Tribunal”) who will be jointly appointed by the Parties. The Arbitration Tribunal will self- administer the arbitration proceedings utilizing the Commercial Rules of the American Arbitration Association (“AAA”); however, the AAA will not be involved in the administration of the arbitration. The arbitrator must be a retired judge of a state or federal court of the United States or a licensed lawyer with at least ten (10) years of corporate or commercial law experience from a law firm with at least 10 attorneys and at least an AV rating by Martindale Hubbell. If the parties cannot agree on an arbitrator, either party may request, any judge located in Cuyahoga County, Ohio to appoint an arbitrator, which appointment shall be final. The arbitration will be held in Cleveland, Ohio. Each party will have discovery rights as provided by the Federal Rules of Civil Procedure within the limits imposed by the arbitrator; provided, however, that all such discovery will be commenced and concluded within sixty (60) days of the selection of the arbitrator, unless otherwise agreed by the parties. It is intent of the parties that any arbitration will be concluded as quickly as reasonably practicable. * * * This agreement will be enforceable, and any arbitration award will be final and non-appealable, and judgment thereon may be entered in any court of competent jurisdiction.

ADA at ¶ 21.

Miller Bros. filed for bankruptcy in October 2012. Attorney Ashdown

and Strauss Troy represented Miller Bros. in the bankruptcy proceeding.

The voluntary bankruptcy petition was signed and filed by ttorney

Ashdown and was also signed by Miller Bros.’ president and sole shareholder, Victor Wells, who declared “under penalty of perjury” that the information provided in the

petition was “true and accurate.”

On Schedule B of its bankruptcy petition, on which Miller Bros. was

to list “all [of its] personal property,” including “contingent and unliquidated claims

of every nature” and the “estimated value of each,” Miller Bros. listed a “potential

claim against former supplier [Akzo Nobel] for breach of contract.” It identified the

“[c]urrent [v]alue of [d]ebtor’s [i]nterest [i]n [that] [p]roperty” as “0.00.” No other

claims were listed on the schedule.

In January 2013, the bankruptcy court approved Miller Bros.’ sale of

its assets to SWAC. Miller Bros.’ bankruptcy case was dismissed in July 2013.

In September 2013, SWAC filed a complaint in the Hamilton County

Court of Common Pleas (the “Hamilton County complaint” or the “Hamilton County

action”) against Akzo Nobel and John Does 1-10. SWAC averred that it had acquired

“all causes of action of Miller Bros.” by virtue of its purchase of Miller Bros.’ assets

during the bankruptcy proceeding and asserted “causes of action” for fraud, breach

of contract and punitive damages against the defendants.

SWAC alleged that Akzo Nobel had fraudulently induced Miller Bros.

to enter into the APA by providing false financial information. SWAC further alleged

that Akzo Nobel had overbilled Miller Bros. for products purchased and sold

pursuant to the APA, had refused to provide Miller Bros. with credits required by

the APA, had misquoted prices and costs of materials and had “guaranteed” Miller

Bros. “a profit percentage of 28%” on all Akzo Nobel products sold by Miller Bros. (but had failed to deliver on that guarantee) in breach of the terms of the APA.

SWAC also alleged that although Miller Bros. and Akzo Nobel had expressly agreed

that Miller Bros. would have “the exclusive right to sell Akzo Nobel products within

a specified geographical area,” Akzo Nobel had “knowingly” and “intentionally”

violated the APA by selling products directly to customers in Miller Bros.’ “protected

[dealership] area.” SWAC claimed that Akzo Nobel’s actions caused Miller Bros.’

bankruptcy and sought to recover compensatory and punitive damages from Akzo

Nobel.

Attorney Robert Kelly represented SWAC in the Hamilton County

action. In October 2013, the case was removed to the United States District Court

for the Southern District of Ohio (the “federal case”). Attorney Kelly continued to

represent SWAC following removal.

In December 2013, PPG, successor-by-merger to PPG Architectural

Coatings, L.L.C., f.k.a. Akzo Nobel, filed a motion to dismiss and compel arbitration

in the federal case. The federal court granted the motion and dismissed the

complaint without prejudice. SW Acquisition Co. v. Akzo Nobel Paints LLC, S.D.

Ohio No. 1:13-cv-785-JW, 2014 U.S. Dist. LEXIS 56813 (Apr. 23, 2014).

In October 2018, SWAC, then represented by attorney Kelly, filed a

complaint against Akzo Nobel, PPG Industries, Inc.

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2022 Ohio 3674, 200 N.E.3d 326, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sw-acquisition-co-inc-v-akzo-nobel-paints-llc-ohioctapp-2022.